i. introduction [1] this appeal raises an issue relating to compensation, or set-off in a common law setting, between two debts in the context of proceedings under the companies’ creditors arrangement act, rsc 1985, c. c-36 (“ccaa”). the question is whether compensation is permitted for debts between the same parties: on the one hand, a debt resulting from the act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts, cqlr, c. r-22003 (“bill 26”), that predates an initial order made under the ccaa and, on the other hand, a debt between the same parties that postdates that order. in these reasons, we will use the expression “pre-post compensation” to refer generally to compensation between debts arising before and after an initial order. [2] this question thus affords the court an occasion to interpret, for the first time, certain provisions of bill 26 as well as the regulation made under it, the voluntary reimbursement program, cqlr, c. r-22003, r 1 (“vrp regulation”). in doing so, we will clarify for public bodies the burden of proof that rests on them in seeking to establish that a claim arising from an agreement entered into under the voluntary reimbursement program (“vrp”) is fraudulent. [3] bill 26 was passed by the quebec national assembly in march 2015 in response to a commission of inquiry that had brought to light the existence of schemes involving collusion and corruption in the awarding and management of public contracts in the construction industry (“charbonneau commission”), and the vrp regulation was made a few months later. the program resulting from this legislation, which was in effect for two years, allowed enterprises to “reimburse certain amounts improperly paid in the course of the tendering, awarding or management of a public contract in relation to which there may have been fraud or fraudulent tactics” (s 3 of bill 26). [4] to answer the question with respect to compensation in the context of this appeal, the court must first determine whether a claim arising from an agreement entered into under the vrp is necessarily a “claim that relates to” a “debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation” pursuant to s 19(2)(d) of the ccaa. we would answer this question in the negative. it cannot be presumed that a claim arising from the vrp falls within that provision where no evidence to this effect has been tendered. we also conclude that a court should generally exercise its discretion to stay pre-post compensation, although it may, in rare cases, refuse such a stay. as well, the court may later lift the stay of the right to pre-post compensation in appropriate cases in the case at bar, however, we conclude that the initial order stayed the right of the appellant, ville de montréal (“city”), to pre-post compensation and that it would not be appropriate to lift the stay in relation to the claims in issue. [5] the appeal should therefore be dismissed. ii. facts [6] sm group, which at the relevant time was a consulting engineering firm, performed a variety of contracts for the city over a period of several years the charbonneau commission’s work uncovered a link between sm group and certain central players in the collusion schemes. two of its former officers were in fact charged with criminal offences. sm group subsequently became insolvent. [7] on august 24, 2018, the quebec superior court made an initial order by which sm group became subject to proceedings under the ccaa and the rights and remedies of creditors were stayed the respondent, deloitte restructuring inc. (“deloitte”), was appointed as monitor. following that order, sm group continued to perform work for the city, including the construction of the samuel de champlain bridge and the rebuilding of the turcot interchange. [8] the city refused to pay for that work. on november 7, 2018, it invoked its right to effect compensation between its debt to sm group for the work done after the initial order and two claims against sm group that, according to the city, arose before the order and resulted from fraud on sm group’s part. [9] on november 12, 2018, the superior court approved the sale of some of sm group’s assets to thornhill investments inc (“thornhill”) one week later, sm group’s contracts were assigned to thornhill. [10] the two claims raised by the city are related to the application of bill 26. the purpose of that statute, read in conjunction with the integrity in public contracts act, sq 2012, c 25, enacted in 2012, and the act to give effect to the charbonneau commission recommendations on political financing, s.q 2016, c 18, enacted in 2016, is to strengthen public confidence in government institutions by addressing the revelations made by the charbonneau commission bill 26 has been described as [translation] “a statutory benchmark for establishing a lack of ethics and lax (if not criminal) morals in a number of enterprises in relation to the awarding of public contracts in quebec” (r v. fedele, 2018 qcca 1901, at para. 44 (canlii)). [11] the first claim the city alleges it has against sm group arises from a settlement agreement entered into in november 2017 by sm group and the minister of justice, acting on the city’s behalf, under the vrp (“vrp claim”). the second is based on a proceeding brought by the city against sm group in september 2018, in which it claimed more than $14 million from sm group for allegedly having participated in collusion in relation to a call for tenders for a water meter contract (“water meter contract claim”). [12] because sm group had failed to repay the vrp claim and because the sale of certain assets to thornhill was imminent, the city advised sm group that it intended to effect compensation between what it owed sm group and the above-mentioned claims, noting that those claims could not be discharged or dealt with by a compromise or arrangement in the planned restructuring process given that they resulted from fraud and from a misappropriation of public funds. [13] in response, deloitte applied for a declaratory judgment stating that compensation could not be effected with respect to the amounts owed by the city to sm group for work performed for the city. iii. judicial history a quebec superior court, 2019 qccs 2316 (corriveau j.) [14] the supervising judge granted deloitte’s application for a declaratory judgment and held that pre-post compensation could not be effected in favour of the city. even though, in her view, the vrp claim was linked to an allegation of fraud that had not been refuted by sm group, she concluded that, according to the principles laid down in quebec (agence du revenu) v. kitco metals inc., 2017 qcca 268, pre-post compensation was not possible. she also concluded that the water meter contract claim was neither liquid nor exigible, which precluded compensation. b quebec court of appeal, 2020 qcca 438 (rochette and healy jja,. ruel ja. dissenting in part) [15] rochette ja, writing for the majority, rejected the city’s argument regarding the vrp claim relying on kitco, he reached the same conclusion as the supervising judge: that pre-post compensation could not be effected in this case. he also rejected the city’s argument that a claim relating to fraud falling within s 19(2)(d) of the ccaa is an exception to the rule stated in that case. in any event, he expressed the view that the city had not proved that s 19(2)(d) applied to its claims. finally, with regard to the water meter contract claim, rochette ja added that the conditions for judicial compensation were not met, since the certainty, liquidity and exigibility of that claim had to be determined later in a proceeding other than that of the restructuring case. [16] ruel ja, dissenting in part, agreed with his colleagues on the nature of the water meter contract claim. however, he was of the view that the vrp claim had to be presumed to fall within s 19(2)(d) of the ccaa and that kitco had to be distinguished on the basis that it had been rendered in a different context. in the final analysis, ruel ja found that s 19(2)(d) of the ccaa represents an exception to the principle established in that case and that it therefore allowed pre-post compensation between the two parties’ respective debts. iv. issues [17] this appeal raises the following three questions: 1 is the vrp claim a claim that relates to a debt resulting from fraud pursuant to s 19(2)(d) of the ccaa? 2 does the ccaa permit compensation between a debt that arises before an initial order and one that arises after that order? 3 if compensation is permitted, should the city be authorized to withhold the payments owed to sm group until judgment is rendered in the case relating to the water meter contract? [18] we will deal with these questions by considering each of the city’s claims separately. v analysis [19] in essence, the city argues that the vrp claim cannot be dealt with by a compromise or arrangement because it relates to a debt resulting from fraud pursuant to s 19(2)(d) of the ccaa according to the city, such a claim falls outside the absolute prohibition against pre-post compensation imposed by kitco. the city also argues that the absolute nature of the kitco rule is inconsistent with the broad discretion conferred on supervising judges by the ccaa. it submits that supervising judges can, in exercising their discretion, authorize pre-post compensation in appropriate circumstances. the exercise of this discretion is particularly appropriate where fraud is involved. [20] for the reasons that follow, we are of the view that the vrp claim in this case is not a claim that relates to a debt resulting from fraud pursuant to s 19(2)(d) of the ccaa. we also conclude that a right to pre-post compensation, or set-off, invoked under the civil law or the common law can be stayed under ss. 11 and 11.02 of the ccaa in our opinion, however, a supervising judge has the discretion to authorize pre-post compensation only in exceptional circumstances, given the high disruptive potential of this form of compensation. in this regard, the fact that the debt underlying a vrp claim is fraudulent, where this is shown, is a relevant factor in the exercise of the supervising judge’s discretion. in this case, we find that it would not be appropriate to allow the city to effect compensation with respect to the vrp claim. nor would it be appropriate to authorize the city to withhold the payments owed to sm group pending the outcome of the case relating to the water meter contract. a voluntary reimbursement program claim (1) characterization of the voluntary reimbursement program claim [21] we must begin by determining whether the vrp claim is a claim that relates to a fraudulent debt, because this is the premise behind the city’s reasoning. for the reasons that follow, we conclude that this basic premise is not correct: the vrp claim is not a claim that relates to a debt resulting from fraud pursuant to s 19(2)(d) of the ccaa. the mere fact that a debtor company participated in the vrp is not sufficient to infer that the company defrauded a public body. in light of this conclusion, it is not necessary for us to deal with deloitte’s alternative argument that s 19 of the ccaa is inapplicable in this case because there is no plan providing for a compromise or arrangement. [22] the first step in characterizing the vrp claim is to distinguish, for the purposes of the ccaa, claims that are subject to a compromise or arrangement from those that are not. section 19(1) of the ccaa sets out the general scheme governing claims that may be dealt with by a compromise or arrangement: 19 (1) subject to subsection (2), the only claims that may be dealt with by a compromise or arrangement in respect of a debtor company are (a) claims that relate to debts or liabilities, present or future, to which the company is subject on the earlier of (i) the day on which proceedings commenced under this act, and (ii) if the company filed a notice of intention under section 50.4 of the bankruptcy and insolvency act or commenced proceedings under this act with the consent of inspectors referred to in section 116 of the bankruptcy and insolvency act, the date of the initial bankruptcy event within the meaning of section 2 of that act; and (b) claims that relate to debts or liabilities, present or future, to which the company may become subject before the compromise or arrangement is sanctioned by reason of any obligation incurred by the company before the earlier of the days referred to in subparagraphs (a)(i) and (ii). [23] as an exception to this scheme, s 19(2) of the ccaa provides that certain claims may not be dealt with by a compromise or arrangement, including those that result from fraud: (2) a compromise or arrangement in respect of a debtor company may not deal with any claim that relates to any of the following debts or liabilities unless the compromise or arrangement explicitly provides for the claim’s compromise and the creditor in relation to that debt has voted for the acceptance of the compromise or arrangement: . (d) any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability of the company that arises from an equity claim; . [24] the burden of proof applicable to this scheme can be determined by referring to the case law and academic commentary on s 178(1)(e) of the bankruptcy and insolvency act, rsc 1985, c. b-3 (“bia”), which is analogous in every respect to s 19(2)(d) of the ccaa. as this court noted in century services inc. v. canada (attorney general), 2010 scc 60, [2010] 3 scr 379, these two statutes “for[m] part of an integrated body of insolvency law” (para. 78; see also 9354-9186 québec inc. v. callidus capital corp., 2020 scc 10, at para. 74). [25] to discharge its burden of proving that its claim relates to a debt “resulting from obtaining property or services by false pretences or fraudulent misrepresentation”, a creditor must establish, on a balance of probabilities, the following four elements: (i) the debtor made a representation to the creditor; (ii) the representation was false; (iii) the debtor knew that the representation was false; (iv) the false representation was made to obtain property or a service (léger v ouellet, 2011 qcca 1858, at para. 30 (canlii); dupuis v. cernato holdings inc., 2019 qcca 376, at para. 37 (canlii); see also l. w. houlden, g. b. morawetz and j. sarra, bankruptcy and insolvency law of canada (4th ed. rev. (loose-leaf)), vol. 3, at h§63; berger, re, 2010 onsc 4376, 70 cbr (5th) 225, at para. 28; j. p. sarra, g. b. morawetz and l. w. houlden, the 2020-2021 annotated bankruptcy and insolvency act (2020), at pp. 1001 and 1006; d. brochu, précis de la faillite et de l’insolvabilité (5th ed. 2016), at pp. 502-3). once these elements have been proved, the creditor of a claim to which s 19(2)(d) of the ccaa applies is in a better position than other ordinary creditors, insofar as such a claim, while not conferring secured creditor status, cannot be dealt with by a compromise or arrangement (see houlden, morawetz and sarra, at h§63) this exception to the general scheme established by s 19(1) of the ccaa must be interpreted narrowly (see, eg, by analogy, lambert v macara, [2004] rjq 2637 (ca), at para. 96; canada mortgage and housing corp. v. gray, 2014 onca 236, 119 or (3d) 710, at para. 24). [26] the city’s burden was certainly not negligible: it had to prove that sm group had knowingly made a false representation that led to the vrp claim. however, the city considered it sufficient for that purpose to mention that the claim existed, and did not try to prove or even allege any of these elements, presuming or assuming that the vrp claim resulted from fraudulent representations. [27] as a result, the content of the vrp agreement, bill 26 and the vrp regulation must be interpreted to determine whether the vrp claim may be dealt with by a compromise or arrangement. in this regard, and for the reasons that follow, we agree with the majority of the court of appeal that s 19(2)(d) of the ccaa does not apply to the vrp claim. [28] first, the content of the vrp agreement itself is a complete bar to the city’s argument that participation in the program in itself justifies a finding that the city’s claim results from sm group’s fraudulent activities because this confidential agreement entered into by the parties clearly stipulates that the amount fixed in the agreement can in no way be considered to constitute an admission of liability, it cannot be presumed that the vrp claim is a claim that falls within s 19(2)(d) of the ccaa. the onus was therefore on the city to prove, in accordance with the provisions of that statute, that sm group had knowingly made a false representation to it in order to obtain property or a service. [29] in this regard, there is, moreover, a well-established principle in the case law that a court must generally make its own findings of fact in applying s 19(2)(d) (see houlden, morawetz and sarra, at h§63). this is true, for example, even where findings possibly linked to fraud have been made in a previous trial or where a default judgment or a consent to judgment might have contained such findings it can be inferred by analogy from the case law on s 178(1)(e) of the bia that the courts have been particularly consistent and rigorous in assessing the evidence presented to them in this regard (see, eg,. terrain dev immobilier inc. v. charron, 2021 qcca 417, at para. 2 (canlii); dupuis, at paras. 36-40; pelletier v cae rive-nord, 2019 qcca 2164, at paras. 13-19 (canlii); tavan v rostami, 2014 qcca 304, at paras. 3-6 (canlii); léger, at paras. 30-40; guilbert v. economical mutual insurance co., 2020 mbqb 179, [2021] ilr ¶i-6280, at paras. 20-25; sharma v. sandhu, 2019 mbqb 160, at paras. 38-45 (canlii); royal bank of canada v. hejna, 2013 onsc 1719, at paras. 90-92 (canlii); berger, at paras. 28-35; re horwitz (1984), 52 cbr (ns) 102 (ont. hcj), at pp. 106-7, aff’d (1985), 53 cbr (ns) 275 (ca);. agriculture financial services corp v zaborski, 2009 abqb 183, 58 cbr (5th) 301, at paras. 12-18; szeto, re, 2014 bcsc 1563, 15 cbr (6th) 255, at paras. 37-63; the toronto-dominion bank v merenick, 2007 bcsc 1261, at paras. 30-48 (canlii); johnson v erdman, 2007 skqb 223, 34 cbr (5th) 108, at paras. 10-12; coyle (bankrupt), re, 2011 nssc 238, 304 nsr (2d) 369, at paras. 53-58). [30] second, bill 26 and the vrp regulation published in the gazette officielle du québec pursuant to ss. 3 and 4 of that statute do not provide any greater support for the city’s position. we agree with the majority of the court of appeal, who rejected the idea of a statutory presumption or a presumption of fact that a debtor made fraudulent representations based solely on the fact that it participated in the vrp. that scheme, which was in effect from november 2015 to december 2017, created no such presumption. [31] the purpose of the vrp as defined in s 3 of bill 26 — in chapter ii, entitled “reimbursement program” — supports this conclusion: 3. the minister publishes in the gazette officielle du québec a voluntary, fixed-term reimbursement program to make it possible for an enterprise or a natural person mentioned in section 10 to reimburse certain amounts improperly paid in the course of the tendering, awarding or management of a public contract in relation to which there may have been fraud or fraudulent tactics. [32] the use of the words “may have been” in the phrase “there may have been fraud or fraudulent tactics” clearly contradicts the city’s argument. moreover, the same words are also used in s 1 of the vrp regulation in describing the purpose of that program: 1 the voluntary reimbursement program makes it possible for every natural person and every enterprise to reimburse certain amounts improperly paid by a public body in the course of the tendering, awarding or management of a public contract entered into after 1 october 1996 in relation to which there may have been fraud or fraudulent tactics. [33] the fact that fraud is characterized as a possibility rather than a certainty is by no means surprising given the vrp’s purpose of recovering amounts paid improperly by public bodies, it stands to reason that bill 26 does not provide for any mechanism to determine whether amounts agreed to under the vrp are in fact related, in whole or in part, to fraud. section 7 of the vrp regulation supports this point, since it states the following: 7. the fact that a natural person or an enterprise participates in the program does not constitute an admission of liability or of a fault committed by the natural person or enterprise. [34] the fault in question in s 7 is a matter of civil liability and is limited to the public contract to which a vrp agreement pertains. where the legislature intends to refer to penal or criminal proceedings, or to civil proceedings outside the scope of a vrp agreement, it does so expressly. this interpretation is confirmed when s 7 of the vrp regulation is read in conjunction with s 8: 8 every natural person or enterprise participating in the program acknowledges that revealing information or sending documents within the program framework does not restrict in any manner whatever a public body’s capacity to bring civil proceedings against the natural person or enterprise in relation to public contracts for which a settlement has not been reached under the program or to which the act does not apply. every natural person or enterprise acknowledges that participation in the program and the conclusion of an agreement under it in no manner protects the natural person or enterprise, or its officers, against any penal or criminal proceedings that have been or may be brought in connection with public contracts entered into by the natural person or enterprise. [35] evidence that a natural person or enterprise participated in the vrp therefore cannot on its own justify characterizing a claim as being related to a debt resulting from fraud pursuant to s 19(2)(d) of the ccaa. [36] however, the city submits that reading ss. 1, 3 and 10 of bill 26 together leads to an entirely different conclusion, namely that a natural person or enterprise that participated in the vrp necessarily defrauded a public body. in our view, the city is wrong. [37] it is true that s 1 of bill 26 does not refer to fraud as being hypothetical: 1. this act provides for exceptional measures for the reimbursement and recovery of amounts improperly paid as a result of fraud or fraudulent tactics in the course of the tendering, awarding or management of public contracts. as we saw above, however, s 3 of bill 26 and s 1 of the vrp regulation are clear: there is no question that, unlike s 1 of bill 26, which sets out the purpose of that statute generally, the substantive provisions of bill 26 and the vrp regulation contemplate fraud only hypothetically in addition, the city’s interpretation cannot be reconciled with ss. 7 and 8 of the vrp regulation, which are reproduced above. [38] that being said, the city points out that s 3 of bill 26 refers to s 10, which specifically states that fraud was committed: 10. any enterprise or natural person who has, in any capacity, participated in fraud or fraudulent tactics in the course of the tendering, awarding or management of a public contract is presumed to have caused injury to the public body concerned. in such a case, the officers of the enterprise in office at the time the fraud or fraudulent tactics occurred are held liable unless they prove that they acted with the care, diligence and skill that a prudent person would have exercised in similar circumstances. the directors of the enterprise in office at the time the fraud or fraudulent tactics occurred are also held liable if it is established that they knew or ought to have known that fraud or fraudulent tactics were committed in relation to the contract concerned, unless they prove that they acted with the care, diligence and skill that a prudent person would have exercised in similar circumstances. the enterprises and natural persons referred to in this section are solidarily liable for the injury caused, unless such liability is waived by the public body. [39] we do not agree with the city’s interpretation on this point. it is up to the courts to conclude that fraud of this kind has been committed. more precisely, we are of the view that the city is confusing two schemes created by bill 26: one — the vrp (ss. 3 to 9) — introduced by chapter ii and the other by chapter iii, which is entitled “special rules applicable to judicial proceedings” (ss. 10 to 17). the first scheme was designed to encourage — for a two-year period — natural persons or enterprises fearing that a public body would bring civil proceedings against them to participate in the vrp with a view to entering into an agreement through a completely confidential process (s 7 of bill 26; s 4 of the vrp regulation). it was only once the first scheme ended that the second, one of an entirely different nature, took effect. [40] the scheme provided for in ss. 10 to 17 of bill 26 is one that deviates from the general law. it applies to judicial proceedings brought by a public body, or by the minister of justice on behalf of a public body, against a natural person or enterprise that allegedly participated in fraud in relation to a public contract. when a court allows such an action, not only can it assume that the defendant caused injury to the public body through its fraudulent act (s 10 para. 1), but in addition, “[t]he injury is presumed to correspond to the amount claimed by the public body concerned for the contract concerned if the amount does not exceed 20% of the total amount paid for that contract” (s 11 para. 1) the enterprises and natural persons contemplated by the statute are solidarily liable for such injury (s 10 para. 4). an amount granted “bears interest from the date the work is accepted by the public body concerned for the contract concerned” (s 11 para. 3). as well, the court “must add a lump sum equal to 20% of any amount granted for injury, to cover expenses incurred for the purposes of th[e] act” (s 14). [41] in other words, these provisions are designed to make it easier to prove causation and injury when such a proceeding is brought, but it should be noted that they are of no effect if a court finds that the evidence of fraud is insufficient; as well, and most importantly, they in no way make it easier to prove such a fault. section 10 of bill 26 is therefore of no assistance to the city, which in any event has not sought to show, on any basis other than the mere existence of the vrp agreement, that sm group took part in fraud in connection with a contract the city awarded to it. the schemes created by bill 26 suggest that a court will recognize the existence of fraud only under the chapter iii scheme. moreover, it appears that the reference to s 10 in s 3 merely serves to specify the natural persons to whom the vrp applies, namely directors and officers of enterprises. [42] lastly, it should be mentioned that it can easily be imagined that an enterprise that entered into a potentially contentious public contract with a public body would make the strategic choice to participate in the vrp out of fear of bad publicity or to avoid exposing itself to the exceptional scheme of chapter iii of bill 26, the result of which, if the proceeding were decided in the public body’s favour, would likely be significant additional financial liability for the enterprise on top of the legal fees it would have to pay. [43] in sum, neither the content of the vrp agreement nor its legal framework supports a presumption that sm group admitted to having committed a fraudulent act; nor does the vrp agreement constitute a serious, precise and concordant presumption of fact (art. 2849 of the civil code of québec). it follows that the city has not shown that the vrp claim falls within s 19(2)(d) of the ccaa. (2) compensation between debts arising before and after an initial order (pre-post compensation) [44] the bankruptcy of large companies often resulted in “the entire disruption of the corporation, loss of goodwill, and sale of assets on a discounted basis” (j. p. sarra, rescue! the companies’ creditors arrangement act (2nd ed 2013), at pp. 22-23; see also century services, at para. 16). parliament, wishing to protect the survivability of such companies, which are essential to economic prosperity and to a high rate of employment, therefore set up a restructuring process in the ccaa that was designed to prevent them from being dismantled and having their assets liquidated at a discount (century services, at paras. 17-18 and 70; callidus, at paras. 41-42). [45] initially, restructuring under the ccaa was done through a plan of arrangement or compromise negotiated between the debtor company and its creditors that averted the company’s bankruptcy by allowing it to adjust its debts and reorganize its business (s. e. edwards, “reorganizations under the companies’ creditors arrangement act” (1947), 25 can bar rev. 587, at pp. 588-90 and 592) later, liquidation under the ccaa emerged as a practice. liquidation can also serve as a tool for restructuring a struggling business “by allowing the business to survive, albeit under a different corporate form or ownership” (callidus, at para. 45; see also sarra, at p 169; k. p. mcelcheran, commercial insolvency in canada (4th ed. 2019), at p 311). [46] the primary tool that allows the ccaa to achieve its restructuring objective is a stay of proceedings and of creditors’ rights (sarra, at pp. 17 and 52; mcelcheran, at p 5). the direct effect of a stay is that it creates a status quo period that stabilizes the debtor company’s situation by shielding it from its creditors while the restructuring process is under way (century services, at para. 60; see also kitco, at para. 43 (canlii)) without such a period, there would be a free-for-all in which individual creditors would fight it out to enforce their rights without regard for the company’s survival or the maximization of its liquidation value (century services, at para. 22). [47] during the status quo period, the debtor company can therefore continue operating without fear of being driven into bankruptcy by its creditors. this temporary respite creates an environment conducive to fair negotiations between the various stakeholders and gives the debtor the necessary time to prepare a plan of compromise or arrangement ensuring its survival, or to take steps to maximize the value of the business it operates with a view to its liquidation under the ccaa (meridian developments inc. v. toronto dominion bank (1984), 32 alta. lr (2d) 150 (qb), at para. 15; kitco, at para. 43; callidus, at paras. 40 and 46). [48] the fundamental feature of the ccaa is a grant to the courts that apply it of a broad discretion to make any orders needed to ensure that restructuring is successful and that the ccaa’s objectives are achieved (century services, at para. 19). the true “engine” driving the statutory scheme (callidus, at para. 48, citing stelco inc. (re) (2005), 253 dlr (4th) 109 (ont. ca), at para. 36), this judicial discretion also plays a prominent part in stays of proceedings. [49] in principle, a court may deny a stay application such applications are rarely denied, however, to the point where the terms “initial order” and “stay order” have, in practice, become interchangeable (sarra, at p 51). stays are in fact requested and granted systematically, other than in certain exceptional cases (p 51). [50] a stay is a temporary measure, however; once it has been lifted, creditors regain their ability to fully exercise their rights and remedies (quinsam coal corp., re, 2000 bcca 386, 20 cbr (4th) 145, at paras. 9 and 14). on an initial application in respect of a debtor company, a court may include in its initial order a first stay period of no more than 10 days (s 11.02(1) of the ccaa). after that, the court may renew the stay for any period it considers necessary (s 11.02(2) of the ccaa). when a stay is renewed, or at any other time in the course of the proceedings, an interested creditor may, in accordance with the procedure set out in the initial order, apply to the court to lift a stay affecting any of its rights or remedies (sarra, at pp. 58-60 and 88; see also muscletech research & development inc., re (2006), 19 cbr (5th) 54 (ont. scj), at para. 5; parc industriel laprade inc. v. conporec inc., 2008 qcca 2222, [2008] rjq 2590, at paras. 7-8 and 14-15). [51] while it is true that the bia and the ccaa form part of an integrated body of insolvency law, there are nonetheless some fundamental differences between the two schemes (century services, at para. 78). unlike the bia, the ccaa gives courts a broad discretion to decide whether a stay is appropriate, to determine how long it should last and to adjust its scope depending on what is needed to restructure the debtor company and to achieve the objectives of the ccaa. in this regard, the ccaa has been described as a “skeletal” statute that does not contain “a comprehensive code that lays out all that is permitted or barred” (century services, at para. 57, quoting metcalfe & mansfield alternative investments ii corp. (re), 2008 onca 587, 92 or (3d) 513, at para. 44). [52] to fully understand the rights and restrictions applicable in a given case, it is therefore not enough to read the legislation; it is also important to consider the court’s exercise of its discretion, which is reflected in all of the many orders made throughout the proceedings. [53] the question raised by this appeal is therefore whether a court’s discretion allows it to stay a right to pre-post compensation, or set-off, invoked by a creditor under the civil law or the common law and, by extension, to authorize pre-post compensation in appropriate cases. (a) power to grant and lift a stay of the right to pre-post compensation [54] in our view, the broad discretion conferred on a court by ss. 11 and 11.02 of the ccaa allows it to stay rights held by creditors if the exercise of those rights could jeopardize the restructuring process this includes a creditor’s right to effect pre-post compensation. [55] under s 11.02 of the ccaa, a court may stay any action, suit or other proceeding that might be brought against the debtor company. despite the language of s 11.02, which at first glance limits the power to order a stay to judicial proceedings, the courts have taken a large and liberal approach in interpreting the scope of the rights and remedies that can be included in a stay order (see meridian, at para. 26; quintette coal ltd. v. nippon steel corp. (1990), 51 bclr (2d) 105 (ca), at pp. 113-14; smoky river coal ltd., re, 1999 abca 179, 71 alta l.r (3d) 1, at paras. 31-33; mcelcheran, at pp. 135 and 245-46; r. j. wood, bankruptcy and insolvency law (2nd ed. 2015), at p 363). for example, in quintette coal, the british columbia court of appeal concluded that a creditor’s right to pre-post set-off can be stayed just like any other enforcement measure with a high disruptive potential (see also associated investors of canada ltd. (manager of) v. principal savings & trust co. (liquidator of) (1993), 13 alta. lr (3d) 115 (ca), at paras. 23-24; north american tungsten corp., re, 2015 bcca 390, 377 bcac 6, at paras. 13-16, aff’d 2015 bcca 426, 378 bcac 116, at paras. 28-30). in our view, this interpretation is the correct one, as it advances the ccaa’s remedial objectives and is consistent with its scheme. [56] it can also be seen from the various model initial orders adopted by the country’s superior courts that prohibitions against setting off debts are standard practice, and in the vast majority of cases take effect as soon as an initial order is made (see court of queen’s bench of alberta, alberta template ccaa initial order, january 2019 (online), at paras. 14 and 16; supreme court of british columbia, model ccaa initial order, august 1, 2015 (online), at paras. 16 and 18; ontario superior court of justice, commercial list, initial order, january 21, 2014 (online), at paras. 15-16; superior court of quebec, commercial division, initial order, may 2014 (online), at paras. 10 and 12; court of queen’s bench for saskatchewan, saskatchewan template ccaa initial order, december 6, 2017 (online), at paras. 15-16). [57] a court’s discretion is therefore broad enough to allow it to stay the right of creditors to effect pre-post compensation in such a case, the prohibition against pre-post compensation flows directly from the stay order. conversely, a court may in its discretion refuse to impose such a prohibition or, if pre-post compensation was stayed by the order, lift the stay at a later date to allow an interested creditor to assert its rights on this point, we reject the absolute prohibition proposed by the quebec court of appeal in kitco, because we conclude that a court has the discretion to allow pre-post compensation in appropriate cases. [58] the instances in which a court should not stay the right to effect pre-post compensation in an initial order will be rare, however. it must be borne in mind that a supervising judge’s discretion, although broad, is not boundless. it must be exercised in furtherance of the ccaa’s remedial objectives (callidus, at para. 49). [59] the status quo period could be rendered pointless if creditors were allowed to effect pre-post compensation without restraint (see kitco, at paras. 20 and 43). tungsten, in which the court stayed pre-post set-off, provides a good example of the disruptive potential of this form of set-off (north american tungsten corp., re, 2015 bcsc 1382, 28 cbr (6th) 147 (“tungsten (sc)”), at para. 32, aff’d 2015 bcca 390, 377 bcac 6, at paras. 16, 20 and 25, and 2015 bcca 426, 378 bcac 116, at para. 29) if a creditor could rely on compensation to refuse to pay for goods or services supplied by the debtor during the status quo period, the restructuring could be torpedoed. the debtor would have a disincentive to provide its creditors with goods and services because it would fear not being paid for them; it would then be deprived of the funds needed to continue operating (see kitco, at paras. 46-48). section 32 of the ccaa in fact gives the debtor a right — subject to the limits and formal requirements provided for in that provision — to disclaim or resiliate any agreement to which it is a party on the day on which the restructuring proceedings commence in addition, an interim lender would most likely refuse to continue to finance the debtor’s operations during this period if the loaned funds were destined to enrich another creditor at its expense. lastly, the rampart set up by a stay to protect against attacks from all sides by creditors would also crumble, thereby increasing the risk of the debtor’s collapse and bankruptcy (see also a. r. anderson, t. gelbman and b. pullen, “recent developments in the law of set-off”, in j. p. sarra, ed., annual review of insolvency law 2009 (2010), 1, at pp. 22 and 29). [60] the inevitable interruption of the business relationship between the debtor and those who are at once creditors and customers could not come at a worse time. without these contracts and without the payment of accounts receivable and interim financing to replenish the debtor’s working capital, the resale value of its business would melt away, thus setting up roadblocks for restructuring it by way of liquidation. and such a situation could also be unfavourable to creditors that wish to effect compensation. if the debtor terminates a contract and refuses to perform it, the creditor concerned will be deprived of the benefit of the contract and will have to find a new contracting party in place of the debtor, with no guarantee that the price will remain the same. [61] furthermore, where pre-post compensation has been stayed, the court retains the discretion to lift the stay based on the specific facts of each case. however, it must be cautious in doing so, given the high disruptive potential of such compensation. [62] in conclusion, we are of the view that ss. 11 and 11.02 of the ccaa authorize a court to stay pre-post compensation. although we would temper the rule from kitco, which involves an absolute prohibition against pre-post compensation, it is our view that in the vast majority of cases an initial order will, and should, stay a creditor’s right to set up pre-post compensation against the debtor. finally, where an initial order has stayed the right of creditors to pre-post compensation, the court retains the discretion to lift the stay having regard to the circumstances. (b) scope of section 21 of the ccaa [63] in addition, we note that s 21 of the ccaa does not grant creditors a right to pre-post compensation that would be shielded from a supervising judge’s power to order a stay under ss. 11 and 11.02 of the ccaa. although s 21 of the ccaa indicates that there is a right to effect compensation in proceedings under that statute, we are of the opinion that it applies only to compensation between debts that arise before an initial order is made (in other words, “pre-pre compensation”). the modern approach to statutory interpretation dictates this conclusion (rizzo & rizzo shoes ltd (re), [1998] 1 scr 27, at para. 21, citing e. driedger, construction of statutes (2nd ed. 1983), at p 87) our interpretation of s 21 of the ccaa is not based on an inappropriate analogy with the provisions of the bia. [64] section 21 does state that it is possible to effect compensation in insolvency proceedings under the ccaa, but it does not specifically deal with pre-post compensation. it reads as follows: law of set-off or compensation to apply 21 the law of set-off or compensation applies to all claims made against a debtor company and to all actions instituted by it for the recovery of debts due to the company in the same manner and to the same extent as if the company were plaintiff or defendant, as the case may be. read in light of its context, its purpose and the scheme of the ccaa, s 21 is, in our view, limited to authorizing pre-pre compensation for the purpose of quantifying creditors’ claims on the date of commencement of proceedings. [65] with regard to the context, s 21 is in a different part of the statute than the one that provides for a court’s discretion to order a stay. the power to order a stay (ss. 11 and 11.02) and most of the exceptions to it (see, eg, ss. 11.01, 11.08 and 11.1) appear in part ii, which is entitled “jurisdiction of courts”. section 21, meanwhile, is in the division of part iii entitled “claims”, which also includes ss. 19 and 20. this indicates that parliament probably did not consider s 21 to be an exception to the stay period if parliament had in fact intended s 21 to be an exception, it would have included it in part ii or expressly stated that it was an exception. [66] what is more, when s 21 is considered in the broader context of the “claims” division, it becomes clear that this provision is part of a set of rules governing the claims that may be dealt with by a compromise or arrangement and the quantification of the resulting amounts. [67] section 19 specifies which claims may be dealt with by a compromise or arrangement (s 19(1)) and those which will remain intact despite the creditors’ agreement to a compromise or arrangement and its sanction by a court (s 19(2)). only claims arising before the date of commencement of bankruptcy or insolvency proceedings are “claims” that fall under s 19 and therefore give creditors a right to vote on a compromise or arrangement as for s 20, it contains rules for determining the amount of claims. once that amount has been determined, it can then be used to define the relative weight of the voting rights of each creditor with a claim.1 [68] section 21 complements ss. 19 and 20; the compensation authorized by s 21 is intended, among other things, to determine the value of the claim that a creditor may have against the debtor on the date of commencement of proceedings in other words, the purpose of s 21 is to provide an accurate picture of the pecuniary interest each creditor has in the restructuring on the date of commencement of proceedings, and of the number of votes each creditor should have (see kitco, at para. 83). this provision is not concerned with what might happen to the debtor’s business after that date, because the date of commencement of proceedings is when [translation] “the claims 1 a plan of compromise or arrangement must be approved by a special majority representing two thirds in value of the creditors or a class of creditors (s 6(1) of the ccaa). must be established” and therefore when the mutuality of debts must be assessed (b. boucher, “procédures en vertu de la loi sur les arrangements avec les créanciers des compagnies”, in jurisclasseur québec — collection droit des affaires — faillite, insolvabilité et restructuration (loose-leaf), by s. rousseau, ed., fasc. 14, at no. 70; see also kitco, at para. 34). [69] with all due respect for our colleague, in light of the context of s 21, it is evident that this provision is not meant to legitimize pre-post compensation. [70] this contextual interpretation of s 21, which limits its scope to pre-pre compensation, is also confirmed by the section’s purpose. it was added to the ccaa to prevent the unfair situation that would result from a creditor being required to pay its debt to the debtor company in full but receiving almost nothing from the debtor in payment of its claim under an arrangement or compromise. the effect of s 21 is that the creditor receives payment of its claim up to the value of the debt it owes to the debtor (anderson, gelbman and pullen, at p 27; boucher, at no. 70; mcelcheran, at p 116). [71] it is true that compensation “creat[es] a type of security interest in the [insolvent company’s] estate” because it “[authorizes] the party claiming set-off [to] ‘reorde[r]’ . . his priority” by reducing the value of that party’s claim (husky oil operations ltd. v. minister of national revenue, [1995] 3 scr 453, at paras. 59-60; see kitco, at paras. 63-68). the creditor uses its indebtedness to the debtor as a form of security for its claim, security that is equal in value to its debt to the insolvent company (stein v blake, [1996] 1 a.c 243 (hl), at p 251) this portion of its claim is therefore sure to be paid in full (husky oil, at para. 58). the effect of compensation is thus to deviate from the principle of equality among ordinary creditors, a fundamental principle of insolvency law that applies with equal force in proceedings under the ccaa, one of the remedial objectives of which is to ensure the fair and equitable treatment of the claims made against a debtor (callidus, at para. 40). the exception created by compensation must therefore be interpreted narrowly as a general rule, “[o]nce a formal insolvency process commences, all unsecured creditor remedies are stayed and the creditor must stand in line behind secured and preferred creditors and share any remaining recoveries in the estate pro rata with all other unsecured creditors” (mcelcheran, at p 78). [72] the prejudice suffered by a creditor wishing to effect pre-post compensation does not justify expanding the scope of s 21. when the debt owed by the creditor arises after a stay order has been made, prejudice is merely illusory. the fact that the creditor contracted obligations toward the debtor company during the stay period does not place it in a worse situation than it would have been in had it contracted with a third party instead. if it had contracted with a third party, it would likewise have had to pay the full price of the goods or services it obtained (tungsten (sc), at para. 27) a creditor that contracts with the debtor company during the status quo period knows or ought to know that it will probably receive only pennies on the dollar in payment of its pre-order claim and that payment of its post-order debt will benefit it and the other creditors. [73] because there is really prejudice only in the case of pre-pre compensation, this exception to the principle of equality should apply to only one of the debtor’s assets on the date of commencement of insolvency proceedings, that is, the debt owed to it by the creditor (kitco, at para. 68; husky oil, at para. 59) otherwise, giving the green light to pre-post compensation would amount to granting certain creditors an additional “type of security interest” in respect of new assets acquired by the debtor after the commencement of proceedings (for example, amounts received as interim financing). professor wood aptly describes the injustice that would thus befall the other ordinary creditors whose rights and remedies have been stayed: the ability to exercise a right of set-off in restructuring proceedings can operate to improve greatly the position of one creditor at the expense of the other creditors. this is illustrated in the following example. suppose that the debtor company owes $1,000 to a creditor. the debtor company then initiates restructuring proceedings. while the proceedings are under way, the debtor company sells and delivers goods to the creditor for $1,000. by exercising its right of set-off, the creditor obtains full recovery of its claim at the expense of the other unsecured creditors whose claims will be compromised or otherwise affected by the plan. [p 400] [74] yet the very purpose of the stay period is to ensure that no creditor gains an advantage over the others while the restructuring of the debtor company is under way (woodward’s ltd., re (1993), 79 bclr (2d) 257 (sc), at para. 12; lehndorff general partner ltd., re (1993), 17 cbr (3d) 24 (ont. cj (gen. div.)), at para. 6); hawkair aviation services ltd., re, 2006 bcsc 669, 22 cbr (5th) 11, at para. 17). pre-post compensation should not allow a creditor to do indirectly what it cannot do directly parliament could not have intended to create such an additional security interest that can be realized during the stay period simply because the creditor and the debtor company have a continuing business relationship. [75] to repeat, viewing s 21 as allowing pre-post compensation would undermine the effectiveness of the status quo period, would jeopardize the survival of the debtor company or the business it operates and could derail the restructuring process. it is clear that parliament could not have intended that a struggling company, deprived of its only lifeline, be condemned to drown in its debts solely because a single creditor wanted to gain an advantage over the others. such an outcome is contrary to the fundamental objectives of the ccaa. [76] before concluding, we will pause to briefly discuss kitco. in that case, the court of appeal rejected a literal interpretation of s 21 as allowing all forms of compensation, including pre-post compensation, without any restrictions our colleague is of the view that kitco, which was applied by the majority of the court of appeal and by the supervising judge in the instant case, has created an asymmetry between the interpretation given to s 21 of the ccaa by the quebec courts and the interpretation given to it by the courts of other canadian provinces he cites air canada, re (2003), 45 cbr (4th) 13 (ont. scj), and tungsten in this regard. [77] in our view, kitco is not at odds with the jurisprudence of the rest of the country on the interpretation of s 21 air canada and tungsten did not determine whether pre-post compensation is consistent with the interpretation and objectives of the ccaa, let alone establish a framework for the exercise of this right by creditors. [78] first of all, in air canada, the issues did not relate to the impact of pre-post compensation on the achievement of the ccaa’s objectives. rather, the case concerned the requirements for legal set-off at common law and the interpretation of a provision of the winding-up and restructuring act, rsc 1985, c. w-11, that was worded differently from s 18.1 (now s 21) of the ccaa on the subject of legal set-off, air canada argued that the making of an initial order under the ccaa results in a loss of mutuality between debts, by analogy with the vesting of a bankrupt’s property in a trustee under the bia. this was the context in which the court found that an initial order under the ccaa does not alter the status of creditor and debtor of the insolvent company, unlike what happens in a bankruptcy proceeding. [79] moreover, in tungsten, the dispute related primarily to the possibility of staying the right to pre-post set-off. the judge who ruled on the applications did not analyze the arguments concerning the effects of pre-post set-off on the status quo period and on the underlying objectives of this period, finding that it was not necessary to do so in the circumstances. our colleague maintains that the question of whether pre-post set-off could be effected was never raised by the parties, which by implication showed that it was permitted by s 21 of the ccaa. in our view, the fact that the possibility of effecting pre-post set-off was not argued tends more to weaken the authority of that decision than to strengthen it. [80] therefore, and with due respect for the contrary view, the state of the law on the interpretation of s 21 had not been settled elsewhere in canada. when ruling in kitco, the court of appeal was not bound by air canada and tungsten. [81] in summary, we conclude, as the court of appeal did in kitco, that s 21 of the ccaa allows pre-pre compensation for the purpose of quantifying creditors’ claims on the date of commencement of proceedings (kitco, at para. 82). this provision does not have the effect of authorizing pre-post compensation. that being said, s 21 of the ccaa does not prohibit this form of compensation either a supervising judge therefore retains the discretion to stay or to authorize the exercise of a right to pre-post compensation, or set-off, invoked by a creditor under the civil law or the common law. [82] we turn now to the situation in this case. (c) application [83] in the case at bar, the words of the stay order made by the superior court are broad enough to prohibit pre-post compensation: no exercise of rights or remedies orders that during the stay period, and subject to, inter alia, subsection 11.1 ccaa, all rights and remedies, including, but not limited to modifications of existing rights and events deemed to occur pursuant to any agreement to which any of the debtors is a party as a result of the insolvency of the foreign debtors and/or these ccaa proceedings, any events of default or non-performance by the debtors or any admissions or evidence in these ccaa proceedings, of any individual, natural person, firm, corporation, partnership, limited liability company, trust, joint venture, association, organization, governmental body or agency, or any other entity (all of the foregoing, collectively being “persons” and each being a “person”) against or in respect of the debtors, or affecting the business, the property or any part thereof, are hereby stayed and suspended except with leave of this court. no interference with rights . orders that during the stay period, no person shall discontinue, fail to honour, alter, interfere with, repudiate, resiliate, terminate or cease to perform any right, renewal right, contract, agreement, licence or permit in favour of or held by the debtors, except with the written consent of the debtors, as applicable, and the monitor, or with leave of this court. [emphasis added.] (ar, vol. i, at p 75) [84] given that the order stayed compensation in respect of pre-post claims, what remains to be determined is whether the superior court should have exercised its discretion under s 11 of the ccaa and allowed such compensation in respect of the vrp claim. although we are of the view that the supervising judge erred in finding, in reliance on kitco, that she had no discretion to authorize pre-post compensation, we feel that remanding the case to the court of original jurisdiction would be unhelpful and would not be in the interests of justice. what is more, the delays resulting from this case have prejudiced the rights of third persons in good faith involved in the restructuring of sm group in this regard, thornhill was unable to reimburse, as stipulated, the transition financing granted by the interveners alaris royalty corp. and integrated private debt fund v lp, which are also creditors of sm group, largely because of the city’s refusal to pay the cost of the work done by sm group. [85] in exercising its discretion under the ccaa, a court must keep three baseline considerations in mind: (1) the appropriateness of the order being sought, (2) due diligence and (3) good faith on the applicant’s part (callidus, at para. 49; century services, at para. 70). [86] the first consideration, the appropriateness of the order being sought, relates both to the order itself and to the means that are employed (century services, at para. 70). it is assessed in light of the remedial objectives of the ccaa (callidus, at para. 49; century services, at para. 70) these remedial objectives include the following: avoiding the social and economic losses resulting from the liquidation of an insolvent company; maximizing creditor recovery; ensuring fair and equitable treatment of the claims against the debtor company; preserving going-concern value where possible; protecting jobs and communities affected by the company’s financial distress; and enhancing the credit system generally (callidus, at paras. 40-42). in this regard, the context of restructuring by way of liquidation, and the impact of pre-post compensation on its progress, can be weighed by a court in exercising its discretion. in addition, protecting the public interest, although it overlaps a number of the remedial objectives to be considered by the courts, must also be included in this list (callidus, at para. 40; century services, at para. 60). [87] here, the city argues that protecting the public interest is a consideration that favours pre-post compensation. it submits that the majority of the court of appeal erred in not considering [translation] “the public interest in ensuring the recovery of fraudulently misappropriated public funds” (af, at para. 2; see also para. 80) we cannot accept this argument, for the following reasons. [88] in our view, the city is wrongly conflating the public interest with its own interest as a public body with a claim. the objective of protecting the public interest does not mean that public bodies should be placed in a better position than other creditors because their claims relate to public funds that would be contrary to the principle of equality among creditors. in the context of the ccaa, protecting the public interest therefore cannot be reduced to protecting the interests of a particular creditor. it involves taking account of interests beyond those of the debtor company and its creditors, such as the interests of employees whose jobs are threatened or of the community in which the debtor company operates (ernst & young inc. v. essar global fund ltd., 2017 onca 1014, 139 or (3d) 1, at para. 102; metcalfe, at paras. 50-52; sarra, at pp. 162 and 501; wood, at p 341; see also, for a clear illustration, canadian red cross society/société canadienne de la croix-rouge, re (1998), 5 cbr (4th) 299 (ont. cj (gen. div.)), at para. 50). [89] protecting the public interest can also encompass considerations of commercial morality that reflect societal norms, such as considerations related to the fact that no one should profit from fraudulent activities in which they have taken part (a. keay, “insolvency law: a matter of public interest?” (2000), 51 n. ir. legal q. 509, at pp. 513 and 525) in very specific circumstances, a court could therefore conclude that protection of the public interest and the ccaa’s other remedial objectives justify authorizing pre-post compensation in favour of a creditor that has proved that it was a victim of fraud within the meaning of s 19(2)(d) of the ccaa, which explains the relevance of determining whether the vrp claim is a claim resulting from fraud in this case but while such a conclusion is possible in law, it should not be drawn automatically in every case, a court should exercise its discretion as indicated in callidus and century services, and if it so happens that predominant weight must be given to the objective of protecting the public interest, the court should take care not to reduce the public interest to the interests of a particular creditor or group of creditors. [90] in the instant case, the city’s vrp claim is an ordinary claim because, as we have indicated, the city has not proved the alleged fraud and such proof cannot be inferred solely from the fact that its claim is related to an agreement entered into under the vrp its argument that the objective of protecting the public interest favours pre-post compensation must therefore be rejected. the city has not relied on any of the ccaa’s other remedial objectives in support of its position. it follows that it has not discharged its burden of proving that the order being sought is appropriate. moreover, the work performed for the city by sm group was in the public interest, as it involved continuing to carry out major projects, such as the construction of the samuel de champlain bridge and the rebuilding of the turcot interchange. [91] the second consideration, due diligence, clearly weighs against pre-post compensation by the city. under the ccaa, this consideration is important because it “discourages parties from sitting on their rights and ensures that creditors do not strategically manoeuver or position themselves to gain an advantage” (callidus, at para. 51) the procedure set out in the ccaa involves negotiations as well as compromises between the debtor and stakeholders and is overseen by a court and a monitor; it follows that all those who participate must be on an equal footing and must have a clear understanding of their respective obligations and rights (para. 51). this court accordingly reached the following conclusion in callidus: a party’s failure to participate in ccaa proceedings in a diligent and timely fashion can undermine these procedures and, more generally, the effective functioning of the ccaa regime (see, eg,. north american tungsten corp. v. global tungsten and powders corp., 2015 bcca 390, 377 bcac 6, at paras. 21-23; re ba energy inc., 2010 abqb 507, 70 cbr (5th) 24; hsbc bank canada v bear mountain master partnership, 2010 bcsc 1563, 72 cbr (5th) 276, at para. 11; caterpillar financial services ltd. v 360networks corp., 2007 bcca 14, 279 dlr (4th) 701, at paras. 51-52, in which the courts seized on a party’s failure to act diligently). [para. 51] [92] in this case, it is clear that the city did not act in accordance with the standard of diligence expected in ccaa proceedings. on this point, deloitte submits that the city should have given notice of its intention to effect compensation in the days after the initial order was made on august 24, 2018. the record does not show that the city learned of the initial order on august 24, 2018, but, as indicated in an email to counsel for deloitte, the city was aware of the existence of that order by at least september 10, 2018 whatever the case may be, we are of the view that a diligent creditor, after learning of the debtor’s insolvency when it is subject to proceedings under the ccaa, cannot wait 47 to 58 days to notify the debtor of its intention to effect compensation. [93] the city justifies the lateness of its application by stating that it was waiting for one of the payments on the vrp claim, which was due on october 31, 2018, before taking any action. yet the vrp agreement indicates that the payment in question was actually due on october 1, 2018 furthermore, the city knew or ought to have known that the term had already expired several weeks earlier, as sm group’s insolvency had resulted in the loss of the benefit of the term of the vrp claim. [94] whether intentional or not, this inaction on the city’s part tended to place it in a better position than other ordinary creditors at what, we should point out, was a critical time in the restructuring process by invoking compensation, the city could obtain services without paying for them. the city had to suspect that if it had indicated its intention to proceed in this manner right from the start, as due diligence requires, sm group would likely have refused to undertake the work provided for in the contract, knowing that it would not be paid and that this would be a major stumbling block in the interim financing process. what is more, under s 32 of the ccaa, sm group could even have asked that the contract be resiliated. [95] in summary, the considerations that guide the exercise of a court’s discretion do not justify lifting the stay of the city’s right to pre-post compensation. given our conclusions on the first two considerations, it is not necessary for us to discuss the city’s good faith. in our view, remanding the case to the court of original jurisdiction would lead inevitably to the same outcome. b water meter contract claim [96] here again, the words of the stay order made by the superior court are broad enough to prohibit pre-post compensation. however, the superior court agreed to lift the stay of proceedings to allow the city to establish the existence and amount of its claim in the case relating to the water meter contract. the relevant excerpts from its judgment are as follows: [translation] the court, seized of the application of ville de montréal dated september 27, 2018 for authorization to lift the stay of proceedings in order to deal with and liquidate a claim in the civil division (“application”); . lifts, in favour of the applicant, ville de montréal, the stay of proceedings ordered in this case with regard to sm. consultants inc., the sm. group inc., the smi group inc. and the sm. group international l.p (“debtors concerned”) . . for the sole purpose of allowing the applicant, ville de montréal, to establish its claim against the debtors concerned . . in the proceedings instituted in the superior court of quebec bearing number 500-17-104932-184; [emphasis added.] (ar, vol. iv, at p 129) [97] this order did not authorize the city to withhold the amounts owed to sm group for the work subsequent to the initial order with a view to effecting compensation if the city was successful in the case relating to the water meter contract. the city submits that it is entitled to withhold the payments owed to sm group until judgment is rendered in that case. [98] in the circumstances, an order allowing the city to withhold the amounts owed to sm group pending the outcome of the case relating to the water meter contract would not be appropriate. remanding the case to the court of original jurisdiction for a decision on this question would, once again, be unhelpful and contrary to the interests of justice. [99] not only would the order being sought by the city place thornhill at the mercy of the outcome of lengthy and complex judicial proceedings — which, it must not be forgotten, concern a claim for several million dollars — but it would not be appropriate for the same reasons as those relating to the vrp claim the city is conflating the public interest with its own interest as a public body with a claim that was never established in addition, the city did not act diligently although its originating application in the case relating to the water meter contract was filed on september 26, 2018, it breached its obligation of diligence by waiting until november 7, 2018 before indicating its intention to effect compensation, even though it had been aware of the initial order since at least september 10, 2018. vi conclusion [100] for these reasons, we would dismiss this appeal with costs. english version of the reasons delivered by brown j — [101] i agree with the majority that a supervising judge has a discretion under s 11 of the companies’ creditors arrangement act, rsc 1985, c. c-36 (“ccaa”), as to whether to allow a creditor to effect compensation, or set-off, between pre-initial order and post-initial order debts (“pre-post compensation”). i find, however, that this discretion is not limited solely to the exceptional circumstances the majority describes. while my colleagues in the majority recognize the broad discretion conferred on a supervising judge by the ccaa, in my view they fail to give full effect to it by concluding that pre-post compensation will never be authorized unless there are exceptional circumstances. [102] moreover, unlike my colleagues who limit the scope of s 21 of the ccaa to compensation between debts arising before an initial order is made, i conclude that pre-post compensation is permitted under s 21 of the ccaa but that it must be subject to the exercise of a supervising judge’s discretion. the majority at the quebec court of appeal (2020 qcca 438), like the supervising judge (2019 qccs 2316), erred in relying on the quebec court of appeal’s decision in quebec (agence du revenu) v. kitco metals inc., 2017 qcca 268, to conclude that pre-post compensation will never be authorized. but, for the reasons set out below, this court must in my view reject the approach taken in kitco. [103] given that the supervising judge in this case did not exercise her discretion, believing herself to be bound by kitco, it would be unwise for this court to exercise that discretion for the first time in order to determine whether ville de montréal (the “city”) may effect compensation here. i would therefore allow the appeal solely for the purpose of remanding the case to the superior court so it can decide whether the city may effect compensation between the debts incurred by sm group before the initial order and the amounts owed by the city to sm group for work performed by the latter after the initial order. i would also allow the appeal so that it can be determined whether compensation is available in respect of the city’s water meter claim against sm group, as nothing in s 21 of the ccaa prohibits judicial compensation. [104] furthermore, and again unlike my colleagues, i find that there is no need in this appeal to decide whether the city’s claim against sm group, which derives from the act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts, cqlr, c. r-22003, must be characterized as a claim based on “false pretences or fraudulent misrepresentation” within the meaning of s 19(2)(d) of the ccaa. in my view, s 21 of the ccaa must be interpreted as allowing pre-post compensation regardless of whether a claim results from fraud for the purposes of s 19(2)(d). i nonetheless agree with my colleagues that proof by a creditor that it was a victim of fraud within the meaning of s 19(2)(d) is a factor favouring pre-post compensation that must be weighed by a supervising judge along with the other relevant considerations. [105] my colleagues consider it necessary to characterize the city’s claim arising from the voluntary reimbursement program (“vrp”) because proof that the debt underlying a claim is fraudulent is a relevant factor in the exercise of a supervising judge’s discretion to permit or to deny pre-post compensation (para. 20) as they acknowledge, this is a relevant factor in the exercise of a supervising judge’s discretion. as i will explain in greater detail below, whether the city’s vrp claim results from fraud is a question to be decided by the supervising judge in the exercise of her discretion, not by my colleagues or this court. i. decision of the quebec court of appeal in kitco [106] kitco metals inc. specialized in buying scrap gold and extracting fine gold from it for resale. it was subject to special tax rules: it paid the goods and services tax (“gst”) and the quebec sales tax (“qst”) on the purchase of scrap gold (“inputs”), but the sale of fine gold was not subject to these taxes. under these special rules, kitco paid the taxes to its gold suppliers, which were required to remit them to the agence du revenu du québec (“agency”). when the fine gold was sold, kitco was then entitled to a refund of the taxes paid the agency, however, became aware of a fraudulent scheme by which the gold suppliers were not remitting to it the taxes they collected, even though it was refunding kitco for them. [107] the agency, suspecting that kitco was involved in this fraudulent scheme, sent it a notice of assessment for more than $300 million (the pre-order debt). on june 7, 2011, the agency proceeded with compulsory execution on that notice to recover the amounts it considered it was owed. the next day, kitco filed a notice of intention to make a proposal under the bankruptcy and insolvency act, rsc 1985, c. b-3 (“bia”), thereby staying its creditors’ remedies (s 69). one month later, it instead obtained an initial order under the ccaa that continued the stay of remedies (stay still in effect at the time of judgment). meanwhile, kitco had been continuing its business activities since june 8, 2011: it was paying taxes on inputs and claiming tax refunds from the agency in accordance with the applicable tax rules. the agency owed it more than $1.7 million in refunds (the post-order debt) but applied this amount as compensation against the tax assessments it was claiming from kitco. kitco successfully brought a motion in the superior court to force the agency to refund it $1.7 million on the basis that this compensation was unlawful. [108] vézina ja, writing for the court of appeal in kitco, began by explaining that june 8, 2011 was the date of commencement of insolvency proceedings and therefore the date on which the creditors’ remedies were stayed and their claims had to be established (para. 34 (canlii)) he also took the view that the compensation effected by the agency was unlawful. in his opinion, although s 21 of the ccaa does not expressly state that compensation can be effected only in respect of debts that arose prior to insolvency proceedings, a literal interpretation of the section must be rejected because it would be incompatible with, among other things, the principle that ordinary creditors must be treated equally (para. 20) such an interpretation would also undermine the status quo period that companies in financial difficulty need in order to develop a plan of arrangement (para. 43). vézina ja therefore concluded that a literal interpretation would ultimately be contrary to the ccaa’s restructuring objective (para. 45). [109] this conclusion was based in large part on vézina ja’s observation that the schemes of the bia and the ccaa have [translation] “close links” and are two “integrated” schemes, which means that “case law and scholarly opinion can be applied to both equally” (paras. 51-52) relying on para. 56 of dims. construction inc. (trustee of) v quebec (attorney general), 2005 scc 52, [2005] 2 scr 564, he considered that “[t]he general principles of the bia preclude any transaction that would have the effect of granting a security that did not exist before the bankruptcy” (kitco, at para. 61) on this point, he found that the principles laid down in husky oil operations ltd. v. minister of national revenue, [1995] 3 scr 453, in which the court stated that set-off is like a form of security, cannot readily be transposed into the civil law, in which compensation is automatic and is effected by operation of law once two debts coexist and are certain, liquid and exigible (para. 65). lastly, he was of the view that s 21 of the ccaa and s 97(3) of the bia identify the point in time when compensation may be effected, that is, on the date on which the creditors’ “provable claims” must be established, which is the date of commencement of insolvency proceedings: [translation] in my opinion, sections 21 ccaa and 97(3) bia, which provide that the “law of set-off or compensation applies to all claims. . .”, thereby identify the point in time when compensation is effected, or in other words, the moment at which the claims must be established: it is on the date of [commencement of proceedings] that temporal reciprocity is established. [para. 82] [110] vézina j.a found, at para. 78, that the question of what constitutes a “provable claim” is answered by s 121(1) of the bia, which refers to “[a]ll debts and liabilities, present or future, to which the bankrupt is subject on the day on which the bankrupt becomes bankrupt or to which the bankrupt may become subject before the bankrupt’s discharge by reason of any obligation incurred before the day on which the bankrupt becomes bankrupt”. [111] with respect, i am of the view that several errors were made in kitco. first, vézina ja erred in relying on this court’s judgment in dims. construction to reach the conclusion that pre-post compensation can never be allowed under the ccaa, even though that judgment was rendered in the context of a bankruptcy under the bia. despite the similarities between the insolvency schemes established by the ccaa and the bia, these are two different statutes, and their differences are significant in the case at bar. secondly, kitco was based on an inappropriate narrow interpretation of s 21 of the ccaa that disregarded the “flexible” nature the ccaa is recognized as having (century services inc. v. canada (attorney general), 2010 scc 60, [2010] 3 scr. 379, at para. 14; r. j. wood, bankruptcy and insolvency law (2nd ed. 2015), at p 337) as well as the broad discretion conferred on supervising judges, whereas courts of other canadian provinces have held that pre-post set-off can be permitted. thirdly, kitco was decided in a context where a company in financial difficulty was actually restructured, and it cannot readily be transposed into a context such as the one in the instant case, which instead involves the liquidation of a company’s assets and contracts. a fundamental differences between the two insolvency schemes [112] it is important to underscore the fundamental differences between the scheme established by the ccaa and the one established by the bia, differences that highlight that, under the ccaa scheme, the mutuality of debts is maintained and supervising judges have a broad discretion that allows them to authorize pre-post compensation. i do not question the notion that these two schemes must be viewed as “an integrated body of insolvency law” and that legislative efforts to harmonize them have been going on for several decades (century services, at paras. 19-24 and 78). as i recount below, however, there remain many differences between the two schemes (wood, at p 337). [113] the three principal canadian statutes dealing with insolvency, the ccaa, the bia and the winding-up and restructuring act, rsc 1985, c. w-11 (“wura”), have the following main objectives: “. . to treat the claims of creditors fairly and equitably, to protect the public interest, to create a fair, timely and cost-effective process, and to achieve a balance of benefit and cost in deciding whether to restructure or liquidate a business, maximizing enterprise value” (j. p. sarra, “the oscillating pendulum: canada’s sesquicentennial and finding the equilibrium for insolvency law”, in j. p. sarra and b. romaine, eds., annual review of insolvency law 2016 (2017), 9, at pp. 9-10, objectives referred to with approval by the court in 9354-9186 québec inc. v. callidus capital corp., 2020 scc 10, at para. 40). more specifically, the ccaa’s main objective is the financial and commercial rehabilitation of an insolvent company through the filing of a plan of arrangement with its creditors (wood, at p 338; b. boucher, “procédures en vertu de la loi sur les arrangements avec les créanciers des compagnies”, in jurisclasseur québec — collection droit des affaires — faillite, insolvabilité et restructuration (loose-leaf), by s. rousseau, ed., fasc. 14, at nos. 2 and 8). in seeking an initial order, an insolvent company shields itself from its creditors, staying their remedies for a certain period so that all its energy can be channeled into preparing a plan of arrangement for a viable recovery (boucher, at no. 2). [114] for these reasons, the scheme established by the ccaa is flexible and allows creative solutions to be put forward to achieve the objective mentioned above, the restructuring of a financially distressed company, in contrast to the bia, which provides a set of pre-established rules (boucher, at no. 8; wood, at p 337). the ccaa is therefore characterized as “remedial” legislation (j. p. sarra, rescue! the companies’ creditors arrangement act (2nd ed. 2013), at p 500; boucher, at no. 3). [115] the court has found that the ccaa’s provisions must be interpreted expansively to enable its remedial objectives to be achieved, and in particular to allow a company to continue its activities and to avoid the social and economic losses that can result from its liquidation (century services, at para. 70). because of the remedial scope of the ccaa, a “broad” discretion is also conferred on supervising judges by s 11 of the ccaa (callidus, at para. 48; century services, at para. 14). this section provides that a supervising judge may make “any order that [the judge] considers appropriate”, although it specifies that such an order must be consistent with the restrictions set out in the ccaa and must be “appropriate” in light of the circumstances of each case. as this court noted in callidus, s 11 is in a sense the “engine” of the ccaa (para. 48, quoting stelco inc. (re) (2005), 253 dlr (4th) 109 (ont. ca), at para. 36). this discretion granted to supervising judges under the ccaa allows for the implementation of “creative and effective” solutions (century services, at para. 21, quoting industry canada, marketplace framework policy branch, report on the operation and administration of the bankruptcy and insolvency act and the companies’ creditors arrangement act (2002), at p 41), in recognition of the “positional advantage” gained by supervising judges, who “acquir[e] extensive knowledge and insight into the stakeholder dynamics and the business realities of [ccaa] proceedings” (callidus, at paras. 47-48) examples of “creative” solutions adopted by courts under the ccaa include “security for debtor in possession financing or super-priority charges on the debtor’s assets” and the release of “claims against third parties as part of approving a comprehensive plan of arrangement and compromise, even over the objections of some dissenting creditors” (century services, at para. 62). [116] as the court again recently recognized, the broad discretion conferred on supervising judges by s 11 of the ccaa enables them to propose solutions “that respond to the circumstances of each case and ‘meet contemporary business and social needs’” (callidus, at para. 48, quoting century services, at para. 58) this broad discretion is unique to the ccaa and has no equivalent in the bia, which is based instead on pre-established rules designed to apply to a range of situations this is, therefore, one major difference between the two insolvency schemes. [117] another major difference between these two schemes is that the ccaa allows a company that has obtained an initial order to continue its business activities during the restructuring or reorganization period (callidus, at para. 41) the continuation of a struggling company’s business activities averts “the social and economic losses resulting from liquidation of an insolvent company” (century services, at para. 70) and “preserves going-concern value” (callidus, at para. 46). accordingly, when an insolvent company has recourse to the ccaa, it is not divested of its property in favour of a third party, unlike with the measures put in place under the bia that vest the bankrupt’s property in a trustee (s 71 of the bia). there is thus no loss of mutuality under the ccaa. the status of debtor or creditor of the insolvent company remains unchanged and is not bestowed on a third party. [118] this mutuality, which survives the initial order, is what makes compensation possible under the ccaa, unlike under the bia. this same fundamental difference between the ccaa scheme and the bia scheme also played a crucial role in dims. construction, on which vézina j.a largely relied in kitco in dims. construction, this court had to determine whether the schemes established in two quebec labour law statutes subverted the scheme of distribution provided for by the bia. those two statutes created a similar mechanism that required an employer subject to one of them to pay an assessment due from a contractor whose services it had retained once the employer had paid the assessment, it was entitled to retain the amount it had paid out of any sums it owed to the contractor, thereby effecting compensation (para. 2) in that case, three employers had been directed to pay the assessments of a contractor, dims. construction inc., before it went bankrupt on april 1, 1999, but only one of them had done so before that date (paras. 3-4). dims. construction’s trustee in bankruptcy, relying on the court’s judgment in husky oil, asked the court to declare that two sections of the statutes in question were inoperable in the context of a bankruptcy under the bia (para. 5). [119] in her analysis, deschamps j began by discussing s 97(3) of the bia, which concerns compensation, and made two relevant observations first, because s 97(3) applies to claims against a bankrupt’s estate, a creditor must meet the conditions set out in s 121(1) of the bia, which means that, in order to effect compensation, the creditor must “prove the bankrupt was subject to a debt by reason of an obligation incurred before the bankruptcy” (para. 40 (emphasis added)) second, s 97(3) states that compensation is effected in the same manner as if the bankrupt were a plaintiff or a defendant in a lawsuit and, exceptionally, makes it possible to proceed “as if the bankrupt’s patrimony had not vested in the trustee as a result of the bankruptcy” (para. 41). [120] deschamps j concluded that there are three possible scenarios in quebec civil law, depending on when an employer pays an assessment due from a contractor: (1) the payment is made by the employer before the bankruptcy, and the debts become certain, liquid and exigible before the bankruptcy; (2) the payment is made before the bankruptcy and the employer is in debt to the bankrupt contractor, but one of the conditions for legal compensation is not met; and (3) the payment is made after the bankruptcy (para. 42). regarding the third scenario — one that also brings into play art. 1651 of the civil code of québec, which provides that a person subrogated to the rights of another (the employer in that case) does not have more rights than the subrogating creditor — deschamps j concluded that when the employer pays after the contractor’s bankruptcy, “[t]he dual status of creditor and debtor”, and therefore the mutuality of the debts, does not arise until after the bankruptcy (para. 51) it must therefore be inferred that s 97(3) of the bia, read in conjunction with ss. 121, 136(3) and 141 of the bia, requires that “the mutual debts come into existence before the bankruptcy” in order for compensation to be effected (para. 55 (emphasis added)). deschamps j added at para. 56 that, according to the rules specific to the bankruptcy scheme under the bia, the trustee may object to the substitution of a creditor (the employer in that case) if this has the effect of giving the creditor a security that did not exist at the time of the bankruptcy: what distinguishes a pre-bankruptcy payment from a post-bankruptcy payment is that, in the former case, the substitution of creditors takes place before the moment when the trustee acquires the bankrupt’s property. in the case of a post-bankruptcy payment, the substitution occurs after the bankruptcy, and the trustee can object to it. the general principles of the bia preclude any transaction that would have the effect of granting a security that did not exist before the bankruptcy. [emphasis added.] [121] the argument is a simple one. for legal compensation to be effected, in addition to the fact that a claim must be shown to be certain, liquid and exigible, [translation] “two persons must be reciprocally debtor and creditor of each other” (code civil du québec: annotations — commentaires 2020-2021 (5th ed. 2020), by b. moore, ed., et al., at p 1558) this is one of the four essential conditions for compensation to be possible. this mutuality of claims is severed when an insolvent company becomes bankrupt, because a trustee in bankruptcy is appointed and the company’s property is vested in the trustee (s 71 of the bia). on the date of the initial bankruptcy event, the bankrupt company loses its status as creditor or debtor in favour of the trustee. as well, the bankrupt company ceases its business activities and normally does not incur any obligations after the bankruptcy. this is why claims provable under the bia must be established on the date of the initial bankruptcy event and why, logically, compensation cannot be effected between pre- and post-bankruptcy debts (ss. 97(3) and 121(1)). however, as the intervener union des municipalités du québec rightly noted at the hearing, the situation is very different when an insolvent company applies for an initial order under the ccaa, since the company continues its business activities while at the same time seeking a stay of its creditors’ remedies (transcript, at pp. 48-49). under the ccaa, the property of the company applying for an initial order is not vested in a monitor the mutuality of debts remains intact, as the company continues to be the debtor or creditor of a claim (see, on this point, l. morin and g-p. michaud, “set-off and compensation in insolvency restructuring under the bia/ccaa: after the kitco and beyond the rack decisions”, in sarra and romaine, annual review of insolvency law 2016, 311, at pp. 343-44; see also a. r. anderson, t. gelbman and b. pullen, “recent developments in the law of set-off”, in j. p. sarra, ed., annual review of insolvency law 2009 (2010), 1, at pp. 23-25 (these authors acknowledge that an insolvent company’s property is not vested in a monitor under the ccaa and that the mutuality of debts is not severed, but they advocate having the courts interpret the ccaa in such a way as to put an end to this mutuality)). [122] these two fundamental differences between the ccaa scheme and the bia scheme suffice to explain why this court should reject the approach proposed in kitco. as we will see below, courts of other canadian provinces have relied in part on these differences between the two schemes to find that s 21 of the ccaa, unlike the equivalent provisions in the bia (s 97(3)) and the wura (s 73(1)), does not prohibit pre-post set-off. b courts of other canadian provinces have recognized the possibility of effecting pre-post set-off [123] for two reasons, the right to effect set-off under the ccaa has been a subject of debate among canadian courts. first, before the legislative reform of 1997 (an act to amend the bankruptcy and insolvency act, the companies’ creditors arrangement act and the income tax act, sc 1997, c 12) and the addition of s 21 (formerly s 18.1), this right was not formally recognized in the ccaa secondly, questions relating to the framework for the right to effect set-off have arisen in recent decades, particularly with regard to the possibility of staying this right temporarily after an initial order has been made (ccaa, s 11.02(1); see quintette coal ltd. v. nippon steel corp (1990), 51 bclr (2d) 105 (ca);. cam-net communications v. vancouver telephone co., 1999 bcca 751, 71 bclr (3d) 226; north american tungsten corp., re, 2015 bcca 390, 377 bcac 6 (“tungsten no. 1”) (decision on application for leave to appeal), aff’d 2015 bcca 426, 378 bcac 116 (“tungsten no. 2”); re just energy corp., 2021 onsc 1793); or of directly restricting the right in the language of an initial order under the ccaa (crystallex international corp., re, 2012 onsc 6812, 100 cbr (5th) 132). [124] more specifically, the question now before this court is whether s 21 of the ccaa allows pre-post compensation. this question is all the more relevant in the context of a restructuring process under the ccaa because the insolvent company continues its business activities. [125] one of the first cases in which this question was considered after the 1997 legislative reform was air canada, re (2003), 45 cbr (4th) 13, a judgment of farley j of the ontario superior court of justice there, farley j had to decide whether a paragraph included in an initial order whose purpose was to limit the right of air canada’s creditors to effect set-off should be varied.2 air canada essentially argued that under the ccaa, as under the bia, legal set-off cannot be permitted between pre- and post-order debts (paras. 10-11). because the bia provides, in s 71 (formerly s 71(2)), that the bankrupt’s property vests in the trustee on the date of the initial bankruptcy event, farley j concluded that there is no longer any mutuality 2 the paragraph in question read as follows: “this court orders that persons may exercise only such rights of set off as are permitted under section 18.1 of the ccaa as of the date of this order. for greater certainty, no person may set off any obligations of an applicant to such person which arose prior to such date” (para. 2). the last sentence was particularly problematic. between a creditor and a bankrupt debtor following a bankruptcy, despite such mutuality being a necessary condition for set-off: in a bankruptcy, the trustee is inserted into the proceedings. post-bankruptcy dealings of a creditor with the trustee in bankruptcy do not involve the same party, namely the debtor before the condition of bankruptcy. . . . thus, creditors who incur post-bankruptcy obligations to trustees in bankruptcy cannot claim legal set-off to avoid paying such obligations by setting-off such obligations against their proven (pre-bankruptcy) claims against the bankrupt the same parties are not involved so there cannot be mutual cross-obligations [emphasis in original; para. 14.] [126] farley j next considered air canada’s second argument, that s 21 (then s 18.1) of the ccaa must be interpreted similarly to s 73(1) of the wura (at paras. 16-17), which provides that the law of set-off applies to “all claims on the estate of a company, and to all proceedings for the recovery of debts due or accruing due to a company at the commencement of the winding-up of the company”. he rejected this argument for several reasons, emphasizing in particular the differences between the words of s 73(1) of the wura and those of s 21 of the ccaa. for example, s 21 does not provide that set-off must be between claims accruing due as of the date an initial order is made. farley j noted that these differences in wording reflect a choice made by parliament, which did not intend to enact identical set-off provisions in canada’s three insolvency statutes (para. 23). for these reasons, he ordered that the paragraph of the order restricting the right to effect set-off be varied (para. 24). [127] although he struck out the part of the initial order that precluded pre-post set-off, farley j nonetheless stayed set-off until air canada’s situation was more stable in order to avoid the disruptive consequences that would result from allowing set-off during the status quo period. he suggested that the best time to effect set-off would be in conjunction with the formation of a plan of arrangement (para. 25). [128] my colleagues argue (at para. 77) that “air canada and tungsten [which i will discuss below] did not determine whether pre-post compensation is consistent with the interpretation and objectives of the ccaa, let alone establish a framework for the exercise of this right by creditors.” this, however, ignores that air canada is widely recognized as being authoritative and as standing for the proposition that mutuality is not severed by an initial order made under the ccaa, which means that pre-post set-off or compensation is possible but is subject to a supervising judge’s power to stay it (see r. thornton, “air canada and stelco: legal developments and practical lessons”, in j. p. sarra, ed., annual review of insolvency law 2006 (2007), 73; north american tungsten corp., re, 2015 bcsc 1382, 28 cbr (6th) 147 (“tungsten no. 3”), at para. 15). for example, robert thornton writes: air canada was indebted to certain parties as at the date of the initial order subsequent to the date of the initial order, those parties became indebted to air canada they wished to set-off their post-ccaa debts against air canada’s pre-ccaa debts owing to them. . . . farley j held that there was no loss of mutuality upon the commencement of a ccaa proceeding accordingly, legal set-off is available both in respect of debts existing as at the date of an initial order and in respect of debts that arose after the date of an initial order. farley j. was correct in so doing. it now appears to be clear in canada that legal and equitable set-off are unaffected by proceedings commenced under the ccaa other than (i) the right to exercise them may be “temporally” stayed and (ii) if the ccaa applicant refuses to acknowledge the set-off, it would be necessary for the creditor to seek judicial intervention. it is the authors’ view that it is appropriate for set-off rights to continue after the commencement of a ccaa proceeding the ccaa applicant continues to carry on business in the ordinary course. [emphasis added; pp. 94-96.] [129] in tungsten, the british columbia court of appeal also considered set-off under s 21 of the ccaa — first in an application for leave to appeal two orders of the british columbia supreme court (tungsten no. 1, per savage ja) and then in an appeal from that decision denying leave to appeal (tungsten no. 2) the insolvent company had obtained an initial order under the ccaa effective june 9, 2015, at which time it owed approximately $4.4 million to global tungsten and powders corp. (“gtp”) under a loan agreement. it subsequently continued selling tungsten to gtp, which gave notice that it wished to set off its claim (the pre-order debt) against the amounts due or accruing due for the tungsten sold to it (the post-order debt) (tungsten no. 1, at paras. 2 and 6). the chambers judge had held that gtp had a valid right of set-off (tungsten no. 2, at para. 7). [130] in these two decisions, the main question before the court of appeal was whether the chambers judge had erred in concluding that the right to effect set-off could be stayed, like the other creditors’ remedies, once the initial order had been made. the question of whether pre-post set-off could be effected was never raised by the parties, which by implication showed that it was permitted under the ccaa. relying on s 21 of the ccaa as well as on s 11 of that statute, which confers a broad discretion on a supervising judge, the court of appeal explained that nothing in the words of s 21 prohibits a supervising judge from making the right of set-off subject to a stay of remedies (tungsten no. 1, at paras. 12-13 and 16; tungsten no. 2, at paras. 31 and 34-35). [131] contrary to what my colleagues say at para. 79, in that case both the chambers judge and the court of appeal considered the arguments relating to the effects of pre-post set-off on the status quo period and on the underlying objectives of this period, but they did so from the perspective of a stay of the right to effect set-off rather than by questioning the very possibility of pre-post set-off. this shows that my colleagues’ concerns about the disruptive potential of pre-post set-off were given adequate consideration by the supervising judge in exercising his discretion to permit or to stay set-off. [132] in particular, the chambers judge wrote the following: “. . . a temporal stay of rights can be granted to further the purpose of the initial order and the purposes of the act” (tungsten no. 3, at para. 25). while conceding that there was some merit to the arguments on the effects of pre-post set-off, he was not prepared to reverse the decision in air canada (paras. 17-18). moreover, he stayed the right to effect set-off on the basis that, “[i]n order to preserve the status quo to effect a restructuring, a stay of the set-off is, and was, absolutely essential”, and he added, among other things, that if the stay of set-off were not continued, the restructuring efforts “would be thrown into disarray” and “[t]he status quo would be significantly altered and the restructuring would effectively be at an end” (para. 32). the judge who considered the application for leave to appeal noted in turn that, “[c]learly, if an attempt at compromise or arrangement is to have any prospect of success there must be a means of holding creditors at bay” (tungsten no. 1, at para. 16). he added that not staying the right to effect set-off would favour gtp to the detriment of the other creditors (paras. 18 and 25) groberman ja, who wrote the judgment of the court of appeal, stressed the principle that a creditor should not be able to exercise a right of set-off to circumvent a compromise or arrangement under the ccaa (tungsten no. 2, at paras. 37-39). [133] despite my colleagues’ protestations to the contrary, the state of the law elsewhere in canada is clear: pre-post set-off is possible under the ccaa, subject to a supervising judge’s discretion to stay such set-off having regard to its effects on the status quo period, the underlying objectives of this period, the advancement of efforts to reach an arrangement, and the remedial objectives of the ccaa. [134] it must be concluded that the approach proposed by the quebec court of appeal in kitco has created an asymmetry between the interpretation given to s 21 of the ccaa by the quebec courts and the interpretation given to it by the courts of other canadian provinces this asymmetry is contrary to the principle of homogenous interpretation of federal statutes (morin and michaud, at p 344). c restructuring an insolvent company versus liquidating its assets [135] finally, in kitco, vézina ja noted that his conclusions were based on the fact that the insolvent company was engaged in a genuine restructuring process and that staying its creditors’ remedies was crucial to bringing this process to a successful conclusion he stressed that kitco’s restructuring plan was in jeopardy because the agency was effecting compensation with the amounts it was supposed to pay kitco. kitco was required to carry on its activities while paying 15 percent in taxes on its gold inputs without receiving the refund to which it was entitled in this regard. it was thus in an [translation] “untenable” position relative to competitors in its field (paras. 47-48). [136] staying the remedies of an insolvent company’s creditors under the ccaa to allow the company to develop a plan of arrangement is of critical importance, particularly where the exercise of a creditor’s right to effect pre-post compensation might sabotage the company’s efforts to regain financial health. [137] in this case, however, and in the opinion of the monitor and the interveners themselves, there has never been any question of sm group proposing a plan of arrangement. once sm group’s principal creditors filed an application for an initial order under the ccaa, it was clear that they wished to opt for a liquidation process — that is, the sale of the insolvent company to a new buyer. in this particular situation, where a plan of arrangement cannot be contemplated and the insolvent company will be liquidated or sold in any event, to conclude that pre-post compensation is never allowed could be unfair to the company’s creditors with claims that are certain, liquid and exigible. in such cases, the creditors’ remedies will be stayed indefinitely and they will never be able to effect pre-post compensation, since the insolvent company will become an “empty shell” after the sale moreover, because a plan of arrangement cannot be contemplated, allowing pre-post compensation will not have the effect of derailing the company’s restructuring process, as there is no such process. ii discretion not exercised by the supervising judge in this case [138] in my view, pre-post compensation is permitted under s 21 of the ccaa, but it must be subject to the exercise of a supervising judge’s discretion. in callidus, this court clarified the framework for the exercise of this discretion under s 11 of the ccaa. the first two criteria are found in s 11, which provides that a supervising judge may make any order that is “appropriate” in the circumstances of the case and consistent with the restrictions set out in the ccaa. the court added that the exercise of the discretion must also further the remedial objectives of the ccaa and be focused in particular on the criteria of appropriateness, good faith and due diligence (para. 70). [139] my colleagues make a series of arguments against compensation in general and pre-post compensation in particular: the high disruptive potential of compensation; respect for the status quo period; the loss of incentive for the debtor to provide goods and services during the stay period because it would fear not being paid for them, which would deprive it of the funds needed to continue operating; the fact that an interim lender would most likely refuse to continue to finance the debtor’s operations if the loaned funds were destined to enrich another creditor; the fact that the rampart set up by a stay to protect against attacks by creditors would crumble; the fact that compensation deviates from the principle of equality among ordinary creditors and that pre-post compensation amounts to giving certain creditors an additional “type of security interest” in respect of new assets acquired by the debtor after the commencement of proceedings; etc. (paras. 59, 61 and 73). [140] most of these arguments presuppose that pre-post compensation will be systematically allowed without regard for the circumstances of each case and without considering whether it is “appropriate” — hence my colleagues’ position that pre-post compensation should never be authorized unless there are exceptional circumstances. although these arguments are legitimate, they must be left to the supervising judge, who will weigh them — along with the other relevant considerations and circumstances — in exercising the discretion to permit or to deny pre-post compensation in a particular case, having regard to the remedial objectives of the ccaa. [141] believing herself to be bound by the conclusions of the quebec court of appeal in kitco, the supervising judge in this case did not exercise her discretion under s 11 of the ccaa given that this discretion was not exercised by the supervising judge, it is not for this court to exercise it to determine whether to permit compensation between the amounts owed by the city to sm group and the claim held by the city against sm group. the court has made it clear that supervising judges are in the best position to decide whether to exercise their discretion in a particular case based on “a circumstance-specific inquiry that must balance the various objectives of the ccaa” (callidus, at para. 76). [142] my colleagues are of the view that remanding the case to the court of original jurisdiction would be unhelpful and not in the interests of justice (paras. 84 and 98). i respectfully disagree. in fact, this court recently noted in canadian broadcasting corp. v. manitoba, 2021 scc 33, that in cases involving an exercise of discretion by a court of first instance, “it is not in the interests of justice for this court to step into [that court’s] shoes and decide these matters at first instance”, and that this court’s role is limited to reviewing the exercise of the discretion “through [a] deferential lens” (para. 88). iii conclusion [143] for these reasons, i would allow the appeal solely for the purpose of remanding the case to the superior court to have it determine whether the city may effect compensation between sm group’s pre-initial order debts and the post-initial order amounts owed by the city to sm group. i would also allow the appeal so that it can be determined whether the city may effect compensation in respect of its water meter claim. appeal dismissed with costs, brown j dissenting. private debt fund v lp: mccarthy tétrault, montréal. dumoulin, montréal. de la ville de laval, laval. ladner gervais, montréal.